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EU Contemplates Reviving WTO Case Against U.S. Regarding Steel Tariffs

EUROPE: The European Union (EU) is deliberating the possibility of reopening a World Trade Organization (WTO) case against the United States regarding a prior steel and aluminum disagreement that instigated tariffs affecting goods worth over $10 billion between the allies during the Trump era. According to insiders familiar with ongoing discussions, the EU intends to abstain from promptly reapplying retaliatory tariffs on American products as a concession to Washington, a pivotal move in their negotiation stance. 

Restarting the WTO case would enable the EU to maintain the option of imposing tariffs in the future while concurrently extending a resolution period, preventing the reinstatement of duties on billions of dollars’ worth of exports set for next month. However, no definitive decision has been reached by Brussels, as stated by individuals speaking on the condition of anonymity. Earlier reports from Bloomberg indicated the EU’s reluctance to enforce tariffs on the US amid concerns that such actions could potentially bolster Trump’s campaign ahead of the upcoming American elections in November. Both the EU and the US have engaged in intensive negotiations for several months, striving to resolve the ongoing dispute. 

The European Commission, the executive arm of the EU, has not provided an immediate response to requests for comments regarding this matter. The trade conflict initially erupted when former President Donald Trump imposed tariffs on European steel and aluminum, citing national security concerns. This move prompted the EU to retaliate with its own restrictive measures. In 2021, a temporary truce was reached between the Commission and the Biden administration. 

Under the terms of the truce, the EU and US allowed themselves a two-year window to broker a resolution termed the Global Arrangement on Sustainable Steel and Aluminum, aimed at permanently resolving the conflict and the associated tariffs. Failure to strike a deal could potentially result in the reinstatement of certain duties next year. While the US partially lifted its measures and introduced a system of tariff-rate quotas, the EU suspended all of its restrictive measures, creating what it views as an imbalanced scenario, resulting in EU exporters paying over $350 million annually in duties. 

With talks regarding the Global Arrangement on Sustainable Steel and Aluminum at an impasse, both sides are negotiating to extend the terms of the truce. The EU seeks to replace the current quota system with annual quotas, while the US aims to prolong the status quo until the end of 2025. 

Despite the EU’s request for a revised tariff-rate quota system, the Biden administration has reportedly resisted, prompting concerns among EU member states about potentially aiding Trump’s election prospects next year if tariffs are reimposed on US goods. However, minor concessions from the US are still under consideration. Sam Lowe, a partner at Flint Global, an international advisory firm, highlighted the EU’s reluctance to extend negotiations until the year-end, expressing that member states preferred avoiding the reinstatement of tariffs. 

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